Kenya’s Investor Compensation Fund (ICF), managed by the Capital Markets Authority (CMA), grew by Sh1 billion to Sh6.84 billion in the year to June 2025, driven largely by stronger returns on government securities and rising transaction fees at the Nairobi Securities Exchange (NSE).
According to disclosures in the CMA’s 2024/2025 annual report, the fund’s interest income from investments such as bonds and Treasury bills grew by 25 percent to Sh845.96 million in the period, making it the single largest contributor to the fund’s growth. Transaction fees from trades at the NSE rose to Sh195.2 million, up from Sh104.6 million in June 2024.
The fund also received a boost from regulatory penalties and market gains. It banked Sh19 million from financial penalties levied on licensed entities by the CMA, and recorded a Sh31.6 million gain on its investment in the stock exchange itself.
Much of the new income was channeled into short term government paper. Treasury bill holdings nearly doubled, while Treasury bond holdings and NSE equity investments also posted modest gains over the period, according to the report.
Established in 1995, the ICF exists to cushion stock market investors against losses arising from the collapse or default of a licensed stockbroker, with compensation capped at Sh200,000 per claimant. The fund draws income from NSE transaction commissions 0.01 percent on equities trades and 0.004 percent on bond trades alongside interest on government securities and CMA imposed penalties.
The fund has expanded roughly five fold over the past decade, from Sh1.3 billion in 2015, a trend attributed to the absence of any stockbroker collapse in that period. It was last drawn on to compensate investors following the failures of Nyaga Stockbrokers in 2008 and Discount Securities in 2009, when payouts were capped at Sh50,000 per claimant a limit later raised to Sh200,000 after public pressure.
With investor wealth at the NSE now at a record Sh3.8 trillion, up from Sh1.9 trillion a decade ago, the CMA has said discussions are ongoing to widen the ICF’s coverage to match market growth, including new products such as derivatives, and to explore a separate compensation mechanism for virtual asset investors following the enactment of the Virtual Asset Providers Act, 2025.
